By Michael Dooms and George Vaggelas,
Seaports constitute safe places for ships to anchor and are used for the sea transportation of commodities and people between regions of the world. The COVID19 pandemic increased the public awareness of their importance, as essential nodes or transport interfaces connecting global regions and facilitating trade.
Ports are providing mainly the following four groups of activities:
- They can be transit hubs facilitating cargoes (and in some cases passengers) destined to port’s hinterland and vice versa, for various types of goods, each using different types of equipment. They can also be transshipment hubs facilitating the trade between wider areas even playing a crucial role in the global trade flows.
- Second, some seaports host comprehensive logistics related services acting as logistics hubs. These ports offer additional space for storage, distribution and a variety of logistics services and all the other services that a cargo might need.
- The third group of activities are those related to industrial production. There are ports, in which large industrial firms or even complete industrial clusters are located. They benefit from the direct link to maritime transport as it allows them to operate efficiently. Examples include chemicals, steel, automotive and food processing plants. Within the same category, seaport areas also increasingly house energy production and distribution activities in the wake of the energy transition.
- The last group of activities are those related to passenger traffic, either coastal or cruise. As regards coastal traffic, ports are crucial infrastructures especially for insular countries as they are facilitating the transport needs of insular areas, contributing to sustaining social cohesion. Ports that facilitate cruise vessels and passengers play an important role in the leisure industry channeling tourists into nearby cities and regions, generating significant economic benefits for the local economy.
While some seaports have geographical and/or economic restrictions in developing all the above types of activities, certain ports have been able to develop as large-scale diversified complexes. Examples of these include the ports of Antwerp and Rotterdam. Other larger ports remain focused almost solely on the transhipment, storage and distribution functions, such as those of Hamburg, Valencia and Piraeus. Some other seaports can be classified as ‘industrial ports’, an example of which is North Sea Port (Belgium & Netherlands).
Facilitating a globalized shipping industry, ports can be affected by trends and changes in global trade and economy. Τhis is a major challenge for the port’s management, to proactively assess the impact of changing trade patterns on their port. However, this is often not sufficient as global value chains and the underlying dynamics can differ depending on the type of trade. Three challenges may be identified as being major issues that need to be tackled. Namely:
- One important tendency, currently ongoing, is a shift from a linear economy (an economy in which finite resources are extracted to make products that are used and then thrown away) to a circular economy (an economy that reduces material use, redesigns materials products and services to be less resource intensive), which will have direct implications on the activity levels in seaports.
- A second challenge for seaports concerns the digitalization of port activities and operations. Traditionally, and still to a great extent today, the (maritime) transport service industry has been lagging in terms of the adoption of digital processes. Big data, Blockchain, Internet of Things are technologies that ports should take into account in their current and future planning.
- Sustainability is a third challenge for contemporary ports, which concerns the achievement of a better balance between the economic, social and environmental dimensions of their performance. Significant investments, both of hardware (e.g. energy infrastructure, production, etc.) as well as software (e.g. governance tools) are required to maintain and improve societal support from local communities.
The abovementioned challenges also affect the Greek ports, although to a greater extent. The majority of Greek ports of national interest are not connected to the rail network (or even have a direct connection to the highways), thereby preventing them from taking advantage of rail in order to exploit their hinterland further. Digitalization is also at its early steps in Greek ports, with the exception of the country’s two main ports, Piraeus and Thessaloniki. As such, Greek ports require additional funding to overcome issues that for other European ports have long been resolved. Considering that the majority of Greek ports operating as Societe Anonymes are state-owned, scarcity of financing is at the forefront of the issues they face, either due to limited state financing and/or due to their not-so-satisfactory financial performance.
Since 2016, Greece has launched an extensive privatization program aimed at attracting private investments and operation in the country’s ports. Already, the majority of shares of the port authorities of Piraeus, Thessaloniki, Igoumenitsa and Heraklion have been sold to private companies and in the midterm, the same is expected for the remaining state-owned ports operating as societe anonymes. It must be noted though that the governance model selected by the Greek government for attracting private port investments does not follow the predominant model applied in the majority of the European ports, which is, the concession of port terminals to private sector companies which provide the port services, with the state maintaining the ownership of the port authority. This is because a port authority needs to manage and regulate property rights, is responsible for planning port development, is responsible for the provision of public goods (for example, services like navigation safety, security, etc.) and the management of externalities and foremost acts as a community manager for the private companies operating in the port area.
George’s and Michael’s press article has been published in the Sunday’s edition of the Greek newspaper “To Vima” and the supplement “OPA News”
